Question
Streetcar General Partnership was created in the current year with the following partner contributions: Mike contributed $110,000 cash, Alex contributed $110,000 cash, and Pat contributed
Streetcar General Partnership was created in the current year with the following partner contributions: Mike contributed $110,000 cash, Alex contributed $110,000 cash, and Pat contributed land with a tax basis of $140,000 and a fair market value of $360,000. The partnership assumed a $140,000 mortgage on the land; no partner is personally liable for the mortgage (nonrecourse liability). At the end of the current year Streetcar made a $14,000 payment on the mortgage. Mike, Alex, and Pat will split all profits and losses equally.
Sales revenue | $520,000 |
Cost of goods sold | 410,000 |
Operating expenses | 70,000 |
Long-term capital gains | 2,400 |
Section 1231 Gains | 900 |
Charitable contributions | 700 |
Municipal bond interest | 300 |
Salary paid as a guaranteed payment to Alex (not included in expense) | 3,000 |
Using the information summarized, calculate Mikes, Alexs, and Pats initial basis in their partnership interest and the basis for each partner at the end of the current year.
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